The Franklin Square Water District provides inappropriate life insurance policies to its commissioners and employees, state Comptroller Thomas DiNapoli's office said in an audit released Wednesday. The district, which serves a 2-square-mile area and 20,000 people, provides its three commissioners and eight full-time employees with a $50,000 life insurance policy that can be transferred to the officials...

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The Franklin Square Water District provides inappropriate life insurance policies to its commissioners and employees, state Comptroller Thomas DiNapoli's office said in an audit released Wednesday.

The district, which serves a 2-square-mile area and 20,000 people, provides its three commissioners and eight full-time employees with a $50,000 life insurance policy that can be transferred to the officials and workers after retirement, the audit said.

State law only allows the district to provide a group life insurance policy, which would only apply to current commissioners and employees, the audit said.

District officials are challenging the finding.

The audit, prepared by Executive Deputy Comptroller Andrew SanFilippo, recommends that the water district "ensure all insurance policies are in compliance with legal requirements."

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The district must file a corrective plan by mid-October, said Brian Butry, a spokesman for the comptroller. "You're essentially providing employees with a benefit that they can take with them, and that is really of no benefit to the district," Butry said in an interview.

Water district officials said in a letter to the comptroller's office that the district has done nothing wrong. In the letter, dated June 25, district Commissioner Salvatore Intagliata said the district "found nothing in the law" that would prevent the type of insurance it offers employees and commissioners.

Intagliata said in an interview that the district, which has 10 total employees not including the commissioners, has turned the issue over to its attorney for review.

The attorney, Jack Libert of Uniondale, said he is researching the issue and working on the corrective letter. However, he agreed with Intagliata that the district's life insurance complies with state law. "The comptroller raised a valid point," Libert said in an interview. "The question is whether it's right or wrong."

The comptroller's audit addresses the district's charge, and maintains the life insurance policy is out of compliance because the district "has individual policies with a single-named insured in each." Under the law, "there would usually be a single policy to cover all members of the group," the audit states.